Warren Buffett says United made a 'terrible mistake' with how it responded to the dragged passenger

Warren Buffett said on Monday that United Airlines made a "terrible mistake" in handling the fallout from a recent incident when a man was forcibly dragged off a flight. The incident drew widespread outrage and sparked congressional hearings.

But the billionaire, whose Berkshire Hathaway is the largest investor in the carrier's parent, United Continental Holdings, said on CNBC that flying had become less comfortable for passengers, who may be packed in tighter seats and on fuller flights.

The April 9 episode, caught on video, showed David Dao, a doctor, being forcibly pulled from his seat on the aircraft to make room for United staff. His attorney later said it left him with a broken nose and concussion.

It brought wide criticism to the airline and its CEO, Oscar Munoz, who initially defended the carrier's employees and was later called to testify in Congress.

"Obviously, it was a terrible mistake," Buffett said. Munoz has since "apologized many times, but your first reaction is going to get a lot of attention."

Berkshire is also one of the largest investors in United rivals American Airlines Group, Delta Air Lines, and Southwest Airlines.

Buffett said this reflected his belief that the industry had become much more efficient, even if made passengers grumble. He said the Dao incident wouldn't change that.

"One of the things they found is that a very high percentage of people are very price conscious," he said. "They may become like cattle cars ... but a significant percentage would rather be treated that way and fly for X than have far more leg room and other benefits and fly for X plus 25%.

"High load factors mean a fair amount of discomfort," he added, referring to the percentage of seats filled. "It's a job I don't want, running an airline."

Down on bonds

Berkshire ended March with more than $96 billion of cash, equivalents, and Treasurys, and Buffett addressed their low yields.

He said the stock market looked "dirt cheap" for anyone who believed interest rates would stay low for 10 to 20 years, and that Treasurys were a "big, big, big drag" on returns.

"It is ridiculous in my view for people to buy 30-year bonds ... at these rates, in preference to buy stocks," he said. He added that bonds were "a terrible choice against stocks," and that it was "just dictated by mathematics."

Buffett also mounted a fresh defense of 3G Capital, its controversial partner on multiple transactions, saying the firm follows a "standard capitalist formula" in slashing thousands of jobs and cutting costs in the companies it buys to make them more efficient.

Buffett said it was "a defect of mine" that he didn't focus as closely on the efficiency of business units at Berkshire Hathaway, which with 3G controls Kraft Heinz and recently tried to merge it with Unilever NV.

He said they had "followed the standard capitalist formula" of "trying to do the same business with fewer people." "People live better when there is more output per capita," he added.

Nonetheless, he said cutting jobs could be a "painful process."

Separately, Buffett said he was more comfortable buying shares of Apple, in which Berkshire has disclosed a 133 million-share stake, worth close to $20 billion on Friday. He said he could "very easily determine the competitive position of Apple now and who is trying to chase them."